Two Apple distributors in New Zealand

Last week, both Apple and Ingram Micro confirmed a new arrangement for Apple distribution in NZ.

Renaissance had the exclusive distributorship for about 20 years, so it represents quite a shakeup. But in the last few years this diminished - online Apple sales here went to being handled directly by Apple, while Dick Smith and JB HiFi have been able to source from Apple too, and not from Renaissance.

Ingram Micro is a worldwide vendor of many technical products, and has also been active in New Zealand for years - selling almost everything here but Apple. But overseas, Ingram Micro is perhaps the largest vendor - outside of Apple - of Apple products, including in North America, Europe and India.

Many people were wondering if the new distribution deal would go to Simms - Simms is perhaps the biggest Apple retailer in Australia. Simms started up in the UK in 1990, and opened an Australian branch in '95.

When launched here at the start of the year, Paul Johnston, former CEO of Renaissance until late last year, was announced as both a Simms NZ shareholder and CEO. One of Simm's NZ product lines is Dell, and others include Kingston Technology, Motion Computing and Tucano.

It stands to reason (but I don't know for sure) that Simms was vying for an Apple distributorship, too, as it was well known that NZ Apple distribution was being negotiated.

According to TechDay's 'Macguide' site, Ingram Micro NZ recruited veteran Mac Division director Kelly Eyerman from the parent IM company in the US to launch its local assault on the Mac market, so it's taking things seriously.

Renaissance reported a couple of days ago that Apple had informed the company an additional distributor would be appointed by October first.

Renaissance is saying - perhaps hopefully - there will be little impact from the announcement of an additional distributor, but Renaissance account managers have been 'working closely' with dealers lately.

The Macguide impression of TechDay says signs don't look good for Renaissance, citing a straw poll completed by The Channel revealing that Apple resellers may purchase from the new distributor, with availability of product being the most important factor.

However, product availability has almost nothing to do with Renaissance - it comes down to routing via Apple Australia, which is 'Apple NZ' by proxy.

Constrained supply comes partly because there is sometimes constrained supply, and partly - which Apple Pacific would no doubt deny (if they ever answered emails) - because you might imagine the Sydney headquarters would be satisfying its local Australian supply chain first.

I'm speculating, of course - but if the incredibly dotty and bizarre NZ iPhone 4 situation is anything to go by, you can see why I'd draw such conclusions.

There's a lot more to all this, though. A few years ago, when Apple was much less powerful in general and had about 3% of the NZ market, Renaissance pretty much acted like 'Apple NZ', or at least, its staff acted how they thought Apple staff might act. Which was not pretty.

Back in those days, margins were high and New Zealanders paid a considerable markup for the privilege of buying Apple hardware and software, which caused much dissatisfaction, both at consumer and dealer level. A quick look at prices in US Mac magazines would make us absolutely green with envy.

But Apple steadily clamped down, eventually enforcing Apple-only online NZ sales, then an international pricing model. (If you think Apple stuff is pricey now, long-term Apple users like myself find ourselves in a golden era of affordability!) But the new (and much-better-for-NZ consumers') pricing model left resellers with very tight margins on Apple sales (I think it's as low as 8%).

This can't have helped relationships between Renaissance and its resellers, which had come to include the big chains like Noel Leeming and Bond and Bond. But once again, Renaissance had nothing to do with this.

At one shop a few years ago, salespeople were told to not spend more than ten minutes selling an iPod, as the margin was so low it didn't justify their wages! In shops, it becomes imperative to sell something alongside an Apple device for the shop to justify trading. Everything else - printers, bags - represents a much better margin for the reseller.

In fact, Renaissance saw the writing on the wall back in 2006, and thoughtfully diversified, buying Natcoll (a set of Mac-based NZ IT training campuses) and the MagnumMac shops. Which have to operate under the same bounds outlined above. Of course, Renaissance was also still supplying Apple-badged gear from Apple Pacific to the other resellers it was now competing with directly via the MagnumMac chain, which you'd imagine might be a fraught position.

But Renaissance, like any company, is tasked to prosper. New CEO Rick Webb, who took over in January, was offered a mandate to take advantage of Renaissance's recently diversified offering. It immediately became his aim to develop an intellectual property that offered a one-stop-shop to the end user.

This brand is called YooBee, an initiative that aims to foster a new client community relationship with individuals up to institutional groups. And this model is exportable. "We would hope to announce, next quarter, some significant wins outside of New Zealand." Renaissance's MagnumMac profits, meanwhile, rose beyond expectations and it appears Apple Macs now sit at 11% of the NZ PC market.

Back home, there's still a lot at stake.

You'd be amazed. If you walk into a large store like Noel Leeming or Dick Smith, even the tables the Macs sit on are probably owned by Apple. You can't put a brochure on one of those tables without Apple's directive - and that simply is not going to happen.

The Premium Reseller model - which some of Renaissance's MagnumMac shops fit into - is subject to an even more strict set of guidelines covering the actual size to the millimetre of Apple signage and where it's placed ... and a lot more besides.

It looks reasonable to assume that Apple designed the Premium model to make it hard for a reseller to keep going.

And this may seem counter-productive, until you speculate on end games.
Apple is master of setting up the entire ecosystem under which the staff, app developers, resellers and even me and you - Apple consumers - all fit into.

The end game for New Zealand is clear: actual Apple Stores.

If you were cynical, as I have become, you might believe Apple sets up a market. Then it makes it look really flash while at the same time making it really hard to survive.

Then it comes in with all its power and money and wham! Amazing Apple Stores appear everywhere, putting resellers out of business. Just look at the proliferation from nothing to a half-dozen Apple Stores in Australia just last year.

May I reiterate this is all my opinion? This is all my opinion. Who actually knows what goes on inside Apple?

Certainly not me.

- Mark Webster mac-nz.com